PDPM, SNFs & Therapy Contracts

PDPM is scheduled to be implemented October 1, 2019 for traditional Medicare Part A patients in the SNFs. This will mean your therapy company will probably need to amend their contract to accommodate this new type of payor source. So how will you be charged?

Since history is a pretty good indicator of the future, I started thinking about the multitude of ways we charged when PPS was implemented in the late nineties. Since there was no standardized charging method for RUGs, facilities were charged a variety of ways. I recall the company I worked for charged $36.00/day for a Medium RUG (that was $1.68/minute by today’s standards)!

We all eventually settled in on standardized methods that made sense to the SNF and the Therapy Company. I believe 3 models are gaining favor and I will try to give you the PROs and CONs of each.

1. Per Minute – Since there are no minimum therapy minutes to provide with PDPM, many believe the SNF will want to be in charge and approve how much therapy is provided as they are now paying for it.

a. Pro – This is similar to managed care part A patients that receive a “flat rate” for the stay and the SNF pays for therapy out the “flat rate”

b. Pro – Puts the SNF in charge of approving minutes from a cost perspective

c. Con – Increasing therapy, increases cost to the SNF

d. Con – Puts the SNF in charge of approving minutes…. Yes, I know I listed this as a Pro, but I also believe therapy delivered may decrease on some with this method and if there is a whistle blower lawsuit (someone claims therapy was not given in the amount needed because it increases the profit margin of the SNF), the SNF is liable. If the SNF has a higher tolerance to risk, this may be a better method.

2. Per Diem – With this model, the therapy company would charge the SNF a flat per diem rate based on the 5 Clinical Categories (Major Joint Replacement or Spinal Surgery, Orthopedic Surgery (except major joint), Non-Orthopedic Surgery, Acute Neurology, and Medical Management) This “feels” similar because today we have 5 per diems based on RU, RV, RH, RM, and RL.

a. Pro – Feels like what we have today

b. Pro – Puts the therapy company in charge of approving minutes

c. Con – Increasing therapy increases cost to the Therapy Provider.

d. Con – Puts the therapy company in charge of providing minutes…. Yes, I did it again. If there is a whistle blower law suit (like above), the therapy company is more liable here. If the SNF has a low “tolerance to risk” this model may be a better method.

3. A percentage of the Rehab components of reimbursement….. Remember the total dollar amount the SNF receives is a combination of 6 individual dollar amounts (3 of which are PT, OT, and SLP)

a. Pro – the SNF can be offered what appears to be a small percentage here, like 50%

b. Con – Put your fingers on a calculator before agreeing to this model……

4. A percentage of the Total amount the SNF receives from all 6 components (not just PT, OT, and SLP) There is a Nursing “RUG” for every Medicare Part A patient in PDPM, NTA, and the one Non-Case-Mix Component.

a. Pro – you can easily calculate what percentage you pay today and compare

b. Pro – aligns the vested financial interest of the SNF and the Therapy Company…..

c. Con – Your rehab company must demonstrate the can positively effect the Nursing and Non-Therapy Ancillaries. If they can’t, why share?

As you can see, there is a lot to think about in the coming months. Don’t get complacent though, change is coming.